Ep. 80 - Contractor to Consultant: How Kory Mitchell Mastered the Exit

Want a blueprint for selling your contracting business without losing your identity or your team? We sit down with Kory Mitchell, founder of Iconic Founders Group and former CEO of a 200M environmental firm, to unpack how blue-collar owners can scale with intention, de-risk the books, and exit with clarity and control. Kory shares how he grew from a family asbestos shop to 37 locations through a mix of organic expansion and 13 acquisitions, and why the best deals hinge on people diligence, not just financials.

We get practical fast: why job costing, WIP reporting, and real-time dashboards transform chaos into predictable profit; how small and recurring jobs often beat flashy mega-projects when it comes to valuation; and the simple margin habits that make buyers pay more. Kory breaks down rollovers, earn outs, and the reality of staying post-transaction, plus how private equity and large family offices think about multiples, leverage, and risk. We also dig into equipment strategy, when leasing can lift uptime and reduce deferred maintenance, and the hidden valuation hits from heavy CapEx, client concentration, bonding exposure, and weak safety culture.

This is a candid look at the human side of exits, too. Burnout, replacing yourself before a sale, surrounding yourself with smarter peers, and getting an executive coach who has actually done deals, these steps create space to think and move on your terms. If you want to protect your people, preserve your brand, and still get paid for the value you’ve built, this conversation maps the path: clean data, safer operations, recurring revenue, and a buyer who matches your goals.

If this helped you see your next step, grow, sell, or both, follow the show, share it with a friend who runs a crew, and leave a quick review so more blue-collar owners can find it.

Transcript

Welcome, Sponsors, And Gratitude

SPEAKER_01 0:09

Hey guys, welcome to the Blue Collar Business Podcast where we discuss the realest, rawest, most relevant stories and strategies behind building every corner of a blue collar business. I'm your host, Sai Kirby, and I want to help you what it took me, trial and error, and a whole lot of money to learn. The information that no one in this industry is willing to share. Whether you're under that shade tree or have your hard hat on, let's expand your toolbox. Guys, welcome back to another episode of the Blue Collar Business Podcast. Brought today is sponsored and presented by the one and only team over at PayDurge Support. Ben Brady and his team over there have helped Psychon up in the front of the office a couple of times. If you want a full comprehensive takeoff of an earthwork project, maybe it's your first time jumping into a commercial project, or maybe it's a big pond and you want a little bit better accurate takeoff, or maybe you need a model to transition from your takeoff that you already have. Any of those scenarios, jump over, paydird support.com, talk with the team over there. They will help you get pointed in the right direction. And honestly, those guys over there do this every single day. They're experts at it, they're not here to waste your time. They do things a lot faster than you. Reach out to them, even if it's just for the one project. So get with those guys over there. Absolutely love them. Um, guys, I just wanted to take a moment. We're a week out from Con Expo. I believe this is going to release during Con Expo. I just wanted to tell you thank you. I'm doing three live podcasts with three national global sponsors um out there at Con Expo. It's mind-blowing for me. And I just wanted to take a moment and tell you guys thank you for tuning in every single week, whether it's YouTube or whether it's on a podcast subscription and you tune into the show. I cannot believe where all of this, you know, had started at ConExpo three years ago, and here we are going back into Con Expo. And it's truly uh makes me emotional to think about the opportunities that I've had just trying to help you guys and help me along the way. So I just wanted to tell take two minutes and say thank you guys, avid listeners, uh sponsors through the uh blue collar businesspodcast.com, members. Um truly. Thank you. But today, guys, bringing you an absolute banger straight off the gate. Um, I told you guys we're stepping it up a little bit this year. Uh, I hope you've been enjoying every episode from the start of this year. We've been really trying to ensure that we're bringing you guys guests that challenge what we're trying to do with our message here. And this gentleman um aligns with my message, his message, uh, what we're trying to, I'm sorry, the show's message and what we're trying to do here at the Blue Collar Business Podcast. And for you guys that have truly listened to the show, and you've probably sat there a couple of times and gone, man, this is kind of elementary. This is, this is, man, uh, I don't need to listen to this episode. Well, you guys, I got one for you today. You may be sitting on the other end going, man, I'm running five crews, I'm running eight crews, I got 20 million of revenue, I'm doing the thing. Okay, you may be doing it profitably, you got all the systems, you got all the things, and you may be even bored with it. Okay. Well, our guest today um can relate because he's been through that exact scenario. He has done the thing, he's grown it over 37 locations. He's the CEO and founder of Iconic Founders Group. Um, basically, he helps founders in contracting businesses sell with clarity and control. Former CEO of EIS Holdings, which was an environmental remediation firm throughout the entire U.S. Um, 20 plus years in specialty contracting, is now moving into the MA lane or merger and acquisition lane through his own personal experience. Just like I'm sitting here with you guys every week talking about my own personal experience and learning. I am truly excited for this episode and truly excited to introduce Corey Mitchell, CEO and founder of Iconic Founders Group.

SPEAKER_00 4:57

Thanks for joining me, man. I'm pumped to be here, Cy. I love watching your show and I learn a lot. And you know, my business got pretty big, but I still learn a lot ever uh every episode. So I appreciate what you're doing out for everybody out there.

SPEAKER_01 5:11

Man, you know, to that point, you just started your own podcast. I just want to throw throw you a little uh throw you a little sauce here. Uh the term it's focused more on entrepreneurs that have sold, and you're basically asking some questions back and forth with them about maybe what they would have done differently, correct? Is that something?

SPEAKER_00 5:34

Yeah, I s it's basically all about you know, guys like your audience, blue-collar founders who have built their business and sold it. Um, and they can find it at iconicfounders.com slash the turnpodcast. Um, and essentially what I do is I ask them about their experience, and it's more about the human side of going through a transaction. And I can tell you, like myself having sold my business twice, there's a huge human element, an emotional element of going through a transaction and then ultimately like leaving your business that unless you've gone through it, it's just hard to understand. And so I ask them about that human experience. I ask them about what they did to get their business in a position to sell for maximum dollars. I ask them about, you know, uh, yeah, just just what it was like to go through, and then anything they learned that they might have done differently. And uh I'll tell you it's the same thing I learn every every episode. Um, it's brand new, but I've been interviewing for several months and I'm having a great time.

From Family Shop To 37 Locations

SPEAKER_01 6:34

Dude, I appreciate anybody. I encourage every member of this audience to somehow tap into the social media lane, whether it be a podcast, whether it be a YouTube channel of what they're doing every day, whether it be a TikTok. I do not care. Just start in some capacity because the opportunities um it can bestow you. It's it is just insane. Market yourself, but at the same time, help people along the way. And that's exactly what you're doing. Man, I I bet the answers are so crazy, too. I'm I'm really intrigued. I'm gonna be checking it out myself. But uh, if you wouldn't mind giving us some background, um, your lane, how you got here, how you got to this point, what is you know, MA? A lot of these guys are gonna be, oh, this may be a little bit too far for me, you know. But that's kind of the point of all of this, is it not? I mean, to get to a point, I guess everybody's goals are different, but for an entrepreneur, a structured exit where you can take care of all of your team and your family, and the business survives and moves on. Like, I believe that's most of our goal. And so, how do we do it? How do you do it, my dude? And tell us a little bit about um taking from a small town, Iowa-based one store, and taking it from mom and pop level to 37 states, I believe, is what you said, including Arkansas.

Buy Vs Build: Growth Tradeoffs

SPEAKER_00 8:17

Yeah, so you know, grew up in the small little mom and pop business. You know, my dad started an asbestos abatement company when he couldn't, he was in the construction business, he couldn't buy a job in the early 80s, and there was this new asbestos regulation. And um, he started just doing it himself, scraping asbestos out of schools. And, you know, I grew up in the business and never ever thought in a million years I'd end up there. Um, but you know, like so many family businesses, it's like it's what you know. And so I I um went away to college, um, went away to school for for several years, came back to the business, and my brother and I bought the business in 2006, so 20 years ago, and it was doing about 8 million in revenue when we bought it, and it was super profitable business back then. Uh, it was spinning off a couple million in profit, so really great lifestyle business for my family, especially when you live in Sioux City, Iowa. Um, you know, that's that's a hell of an income in Sioux City. Um, but we started uh really focusing on growth. And the way we did that is we started opening a couple new locations, and then we'd add a service line. So, like we were doing asbestos, but then we'd add demolition. You know, there you typically you don't do an abatement job unless there's a demo component. So we started doing some structural demo, we started doing an interior demo, and then we then we'd add a we'd go buy a small business, and then we'd add a new service line to that business. So we'd go buy a small mom and pop demo business and we'd add asbestos, or we'd add some other kind of environmental service. And that's really where it started. So we did that over many years, and you know, thankfully, it it just it just kept growing. And um, by the time I left the business, we'd done 13 acquisitions, 200 million in revenue, about 1,400 people. And um, I was CEO of that business until two years ago. And the reason I started doing um mergers and acquisitions was I had done a whole bunch of it myself, where I'm, you know, and super involved in buying these businesses. So I I learned what a buyer's looking for. Um, and then I joined some specialty contractor boards where I was on a landscaping services board, I was on a restoration contractor board. So you start seeing it from the other side, what buyers you know think good looks like when they're buying a business. And what I realized is there's this huge disconnect because most people in our industries don't have any idea what good looks like to a buyer, they don't know what buyers are looking for. Um, and there's so many things that I used to think were true that just aren't true when it comes to trying to sell your business for maximum exit. And so that's why I started the business. I, you know, I had an amazing run in our business, uh, extremely fortunate in the transaction that we were able to have. But right now, honestly, I I feel like it's my calling. I feel like I'm giving back every day of the week. People that come to us, they either ask for help on how am I going to grow and scale the way you did, Corey, or how can I, how can I, you know, prepare myself, put myself in position to get the maximum transaction value, and make sure my people are taken care of, make sure my legacy is preserved, make sure my brand stays intact. All the stuff that that especially you know small blue-collar founders care about, we want to make sure that we can maintain that legacy that they care about and make sure it ends up in good hands and that their people end up in good hands. Because what I hear more than anything is I want to make sure my people are taken care of. Much more so than the dollars. They worry about their people. And so it's been a real privilege for me to be able to now give advice back to people. And don't get me wrong, I'm doing it, it's a for-profit business. I want to make money doing it, and it and it can be a lucrative business, but it really feels like a win-win because I'm a really different option than some investment banker in New York City that's going to advise you on selling your company because I speak your language. My my warehouse looked probably just like your warehouse. You know what I'm saying? Um, so it's just a it's a different approach, and like I say, I it feels great doing it, and I'm having an awesome time.

People Diligence In Acquisitions

SPEAKER_01 12:48

Contracting, man. So you're navigating. Did you say 14 acquisitions navigating as you're coming across the country essentially? So that's where you really wow, man. So you bought I'm assuming, you know, I want to pry in there just a little bit. Sure. I'm assuming not every single one of them was like rainbows and butterflies. Dude, if you could uh what kind of percentage would you say actually worked out? And maybe the percentage that you maybe we could have maybe just started up from nothing there and got past that. Oh, you know, talk a little bit about that real quick.

SPEAKER_00 13:31

Well, what I would say is this is where the due diligence on the people side matters so much. Because at the end of the day, it's all about the people and it's all about the trust that you build with the businesses that you buy if if that's that's that that's what you decide to do. Look, there's two options. It you can grow through organic growth and open a new greenfield location, and and there's a there's pros to that. It's cheaper, right? You you find some great leader that can open that business for you and you can grow it organically, and you don't have to pay a multiple on Ebita, right? But it's slower, and so you've got to kind of pick your battles on the way you want to grow. I will say that we did a pretty good job overall vetting the businesses we bought by spending a lot of time in person, taking them out to dinner, having a beer, figuring out what they cared about and making sure they were gonna be a cultural fit for us, making sure they had the right safety culture, all that. But I made plenty of mistakes. So I had none of them, none of these businesses we ever bought went to zero. But some of them um had a lot of pain for me personally because typically, you know, if say you have a founder that isn't quite fully transparent about what's really going on in the business, or they're not quite as honest with you as as as you'd think. Um I had to spend a lot of my own time flying and putting out fires all over the country. And that was one of the hardest things about growing is it gets to a point where the business started kind of running me as opposed to me running the business. Um but you know, I had a business once that we acquired where I was like, this this deal's too good to be true. You know, this one's too good to be true. We bought this, it was a million-dollar Ebuton business, and we got it for a song and it came with a couple million dollars of yellow iron, and it came with a building, and you know, we basically bought it for the value of the stuff, and it spun off a million in profit. And we're going, well, what this is too good to be true. Well, day after we close, it turns out the owners hate each other and they wanted to kill each other, and so we ended up having to exit the president of the company, which is problematic, right? He owned the relationships with the customers. Um and so those are the kind of things that where where I really talk about making sure you do your people diligence. Um, there's there's obviously you got to do all the financial, all that stuff. That's that's table stakes, but the people side of it's so important because at least for us, we wanted our founders to stay and become our partners in the business. We asked them to roll equity and become minority owners in our business. And so they were along for the growth and also for the future transaction. Um, when we sold, they were able to make a meaningful profit on their rollover equity. And so we wanted them to stick in the business and we wanted their their brand and their culture and their relationships with their customers and their people to stay with us.

SPEAKER_01 17:50

Dude, great answer. The people are what we care about. Our people, once you build the team, you know, you also said kind of just rolled right over, you know, the accounting has to be there. And I think that's where a lot of us struggle. And um, I struggled there. I didn't know what I needed. Uh heck, I didn't know what half those documents met, you know, other than oh, got to do taxes once a year, or the banker wants to see it, or whatever that may be. But it took me years to figure out oh no, that PL means something. That balance sheet means something. Hey, what is it trying to tell me year over year? And so it took me some time, but it's not just those two documents. There's a lot of other documentation to tell you the health of your business. And there's processes that'll help you get there. And but the accounting piece, I encourage you guys if if you haven't, um, spend time there. Build some strategy. If you're not where you want to be, find somebody that can help you get there because there may be an opportunity that comes along, and you're not gonna be ready because you don't have the accounting piece, and um, you know, you're a little all over the place. It's a stack of invoices and bills on one desk, and it nothing's digital, and it's very clunky and hard to read. People don't want to spend money when it's unorganized, they want to see nice uh clean documents where the story's nice and easy to tell on paper from where you've been, and um don't have any necessary uh personal experience per se with this, but I have heard a lot of these transactions happening and and they kind of blow my mind. If you're um it's a quick opportunity, everything's all their ducks in a row, counting piece, they're people, they have the systems, they can prove it, everything's on digital, and then all of a sudden in two weeks, hey uh I'm working for so-and-so, I got acquired. What are you serious? Like, did you do all right? Oh, yeah, buddy, I'm just fine. It's crazy how quick it can happen. But I just wanted to highlight that little piece right there and maybe talk about um not just through working through your own personal experience, but maybe for the audience in general, some of the most important uh accounting pieces and structures they can be getting put together so they don't miss the opportunity if it does hit them, hit their desk.

What Buyers Value: Recurring Work

SPEAKER_00 20:21

Yeah, I mean, this is a great point and um really important. One of the things I always recommend is actually to hire more of a of an accountant than you need. I I reckon if you're planning on growing, I recommend someone that's gonna kind of raise you up with them, not someone that you gotta pull along. Because especially someone that's been through it before and has been in a business that's already grown, um, there's several things that you you really want to have in place. And by the way, it's you can't like you just said, it's so hard to do a transaction if you can't pull together high-quality data in a reasonable amount of time, there's a reason like we don't start working with clients until they're at about three million in profit. And that there's a there's kind of a magic number to that. We might start in twos, you know, but people don't tend to have their financial house in order until they're about that size. And so it's really important that you have a way to look at your data in real time to know how your projects are doing in real time, right? So from a job costing standpoint, you can you cannot believe how many people have no job costing whatsoever. An ability to give some kind of a forecast. You know, I mean, I can tell you being in you know, even in a large business, I only had about 60 days of visibility in the bike forecast because we're project-based business. But having an ability to know kind of where things are looking down to the bike is really important. Um transparency overall for the team is really important in terms of your team knowing what good looks like for them, what what is expected of them from their performance standpoint. So, like a version of like dashboarding for your PMs or your sales team, depending on uh how your your business is set up, so they know what they are aiming at from a revenue and profitability standpoint, particularly profitability. Um, and then here's another thing there's this idea out there that big projects are a good thing. And I'll tell you right now, they're actually a bad thing when you go to sell your business because buyers want repeat and recurring revenue. And any of those large lumpy projects, the first thing a buyer says is that ain't gonna repeat. I don't have any idea if you're going to get that big project next year. But what they do see is when they have lots of two, three, four, ten thousand dollar projects, those are a lot easier for them to predict and they're it's a lot more of an attractive business. And so figuring out what kind of projects to focus in on is also really, really important. And so those are all things you want to be thinking about when you're thinking I might want to exit two, three years from now or do it. And when I say exit, I mean sell, not necessarily leave the company. You want to figure out what good looks like from the start and build backwards. And a lot of those tools such as financial transparency are absolutely critical.

Staying Post-Sale: Rollovers And Earnouts

SPEAKER_01 23:38

I think you hit the nail on the head with financial transparency and visibility for your team because it it takes us blue collar guys a minute to figure out hey if we can profit's not a dirty word. If we can figure out how to show the entire team that's what we all need to be focusing on. Now it doesn't need to be in the same lens or the same spreadsheet as everybody else but if there's versions of the same spare spreadsheet that everybody can view and we're working towards the profitability on that project oh my gosh it unlocks. I'm just currently starting to feel this it's taken me years of um doing it wrong uh figuring out a few systems and and now we're really clicking along and uh whip reporting and job costing and all of that. But it's taken some time to have some visibility but man when you see that whip report it's not just me as owner it's the superintendent running the job. He's encouraged now he he's like hey I'm doing a good job and here's why I kept this project under gravel I kept this project under time less equipment whatever the case it me hey I I saved a little bit on material whatever it may be that's the things that you've got to highlight because it's focusing profitability and man we all we're all just trying to build businesses uh in the first five years and get it off the ground you know what I mean and then you start kind of navigating in these weird waters of man I do want to grow I do want to take these big lumpy huge project commercial jobs on because that's what we're all focused on. That's what we're all told that's where the money is and then you find out as you as you climb that ladder man margins start going the other way and and then they get super thin everything is super visible and super transparent and there's money to be made there if you know that game but if you don't and and you and you can carry just like you said I think that's so important for a lot of our guys out there that think oh man I'm only doing 100K a month in revenue and I'm doing three or four of these reoccurring little man that's huge. Like recurring revenue is everything maintenance contracts things of that nature during and correct me if I'm wrong at any point Corey but like that's what they want to see they want to be able to predict they want to be able to show that forecast and that's not language that these blue collar guys necessarily hear a lot of but essentially they want to see into your through your lens into their future and how do you do that well you you start navigating job costing to get it built onto paper so they can see that visibility it all goes together. But I the accounting piece is obviously so strong through it all but talking about you know guys that are at that point that are don't even know where to start you know what I mean say they they do have their accounting say they do have um scalability maybe they're franchised out or maybe they're running multiple offices and they're just at their wits end and they really do want to start navigating um you've hit this uh topic a couple of times and I had no idea I thought when you exited you exited you know I thought you were just done you're you're done well there's this transition period and it's been explained to me that you normally stay on uh two to five years depending on you know normally size of transaction but and help implement your team talk a little bit about that from an ownership perspective and you've been talking to to guests that have done it and you've been through it yourself talk about that angle and what's that like and you know would it be a good fit for somebody that's listening on the other end like uh maybe super cringy to think about but at the same time we actually have a perspective here love to hear it so we can actually fit for ourselves.

Why PE Pays: Multiples And Leverage

SPEAKER_00 27:58

Well look it it there's different kinds of buyers first of all right there's you know you everyone hears about private equity but there's also large family offices that there's these really really wealthy family offices that now invest in the blue collar trade so they can have cash flow for their families and they're kind of run like a private equity fund and they're large multi hundred million sometimes billion dollar family offices um and then there's also strategic buyers that might just be a large conglomerate that's a a scale business. So it kind of depends on who the buyer is you know of course private equity is what most people hear about and private equity the way it works typically is they usually require that you what's called roll equity which means a portion of the of the transaction gets rolled into the platform business that they're building out because usually a PE fund is buying a business to roll it up scale it and sell it again. And just just for just for for the audience to kind of understand why they would do this. Typically if you can buy a smaller business at say four to six times profitability by the time you roll it up and scale it and put some additional systems in place and and and so forth and you get it above say 20 million in profit that business is now worth double digit multiples. So imagine you buy 10 businesses at five times EBITA and and you can now sell it for 10 times zebra and all you've done is bundle together a bunch of businesses and done some integration work. And by the way you're also doing it on leverage because a lot of it's done on debt. So your your ability to make profit this is why these guys make so much money because they put down some cash and then they start doing it by on leverage and then they exit two three four five years down the road after they've put some systems in place and done some scaling and added some maybe some salespeople to make the organic growth go as well and they've done some of those things that buyers want to see. So typically they ask sellers to roll equity into that now holding company and then when it goes to sell down the road they now get a piece of the transaction when it's sold sold for that bigger exit. And they can typically convince sellers to do that because they show them how much that rollover equity is going to grow to because it might triple or quadruple over that three four years. And so they're they're asking them to roll equity but they're also going to offer them an earnout and they're going to say okay if you continue to have say your business continues to operate and grows a little bit or grows EBITDA profit over the next two three years, we're gonna pay you an extra X million dollars and that might be divided over two, three years. And their goal is to keep the founder in place so that it keeps stability within that business. And so usually there is a there's an employment agreement for the founder and there's an earnout for the founder often and role equity and all those three things the goal is to keep the founder. Now that doesn't mean the founder has to stay they can leave they can walk away from their salary they can walk away from their earnout their oh their role equity would stay in place typically usually the the fund has an option to buy it back but it's usually not and so it's extremely uncommon for the founder to leave right away because of all those kind of golden handcuffs that are put on them. Now if they're a if they're an absentee owner and they've already got say a president of the company that's running day to day that's a different story and sometimes it's easier to exit so usually I tell people listen you want to leave your business first thing you got to do before you sell is replace yourself because you want to exit because tell I tell you you have problems right now you think you're gonna sell and your problems are going to go away guess what problems are all there Monday after you close so literally you're going back to work Monday you're just you're richer you got a big pot of money in your bank account and it's not just tied up in your business but the problems are still there.

Value Levers: Margins, Mix, And Safety

SPEAKER_01 32:16

So you're better off solving the problems and putting a a a a uh transition plan in place before you sell if you if your goal is to actually leave when you sell no that's that's uh a great insight into it never knew half of that honestly um I knew I mean you hear of PE firms and like most of us are like ooh you know what is that and you don't even understand what that insight does or what they want with you when they are talking to you like um it's just it's not even a concept we can really grab because we're so caught up in the weeds of just doing business we're not worried about you know the structured exit or getting to that point. And you know a lot of these guys are probably further along than they think they are and they're just beating themselves up every day to get them to go further as that's that's pretty similar with my thinking is oh well you're not doing enough let's do a little bit more let's do a little bit more and I think that's how a lot of us get so far to be honest with you but no I appreciate that insight because yet there's not many people that have done this like it's so hard to get a business off the ground alone get to the five year 10 year mark structured growth million dollar profitability like it takes a small percentage from start to this point but when it is here to have somebody they can lean on call and go, hey man, I I keep getting these offers and I don't know why uh it's not really what I want to do but it may be what I want to do but I don't even know how to navigate this just so to have a lane for for these guys to to check out um I'm assuming iconic foundergroup.com correct i iconicfounders.com iconicfounders.com thank you for the correction there but at least they can come get with you guys hey this is what I've got check me out is this something I want to entertain or is this hey two years from now let's set up this is what we need to be working on to get us to that point is I'm assuming that's essentially what iconic does similarly we do two things we do transaction advisory for people that want to sell right now and then another thing we do is what we call value creation work where we we put on basically a guy like me on their business like a coach and we help them over two three years to prepare for for exit and we we try to make them more valuable during that time.

Gear Strategy: CapEx, Leases, And Risk

SPEAKER_00 35:03

And um so we'll put someone on almost like an outside board member slash coach that kind of is a person in their corner that's been through it just like I have where they've been through an exit or two or three and we've got these amazing people that have been you know they've all grown and scaled huge businesses. We just signed a new guy that just sold his business for a billion dollars and uh is a restoration contractor and these guys want to give back because they're like we don't need to work but we want to be able to give back and be coaches and feel like we're valued. So it's amazing to be able to have these people in your corner. So we charge a fee for that a monthly fee for um essentially for that board service and then we charge a a fee on at exit in creating that additional value. And so those are really the two things that we work on um and my goal is to make this simpler right like like you just said like I didn't know half that stuff well I sat down with a a a new client last week and she goes Corey no one's ever explained it to me in such simple terms before like I didn't understand at all how any of this worked and so I I was the same way you are you know 10 years ago I didn't know how to spell PE you know so you know I've been through a lot now I've been involved in a hundred transactions in the last seven years and so I've kind of seen a lot of everything and all sizes of deals and now I can make it simpler try to make it easier on founders and I I know what they're going through because I've been through it myself let's talk value for just a minute because a lot of these guys are caught up in the ways are caught up in the woods can't see down the end light of the tunnel they feel like they are mentally just diminished like I can't be worth anything get me out whatever uh you've mentioned EBIT uh um earnings before interest and taxes and amortization depreciation and amortization that's right I was so close and that this is what buyers always use so I I hate to use that on your show but that's what buyers talk in in terms of EBITA I it and in simple terms it's basically cash flow but you add back things like um depreciation and things like one time expenses or anything personal that you're running through the business gets added back as an adjustment to EBITA.

SPEAKER_01 37:28

People are always nervous about talking about expenses that they might run through the business but everyone does it not me but everyone else um so you know those are all added back well let's talk a little bit you said you know value you know evaluation for these guys what can they be doing uh from a mindset perspective but an actual execution perspective number one to increase their value or uh and or give them an insight to how they need to be looking at their business from a value standpoint for uh an exit or anything in the future because a lot of these guys don't have a clue sure including myself yeah yeah no and and I didn't either um so there there's a there's a number of things I mean we talked about a little bit like the financial systems and and technology is is is one example of having um some really uh really good systems in place to be able to see your your data in real time and be able to manage your your projects and your your PL in real time and actually know where you stand uh from a performance standpoint and ability to forecast.

Structured Exit vs Quick Sale

SPEAKER_00 38:46

Those things are really important um I will tell you that gross margins are really important that you know that people I will here's a thing that's kind of a misconception people think oh you know they're gonna try to beat me up on my value and try to buy me for a steal or whatever. The reality is is buyers typically would rather pay more knowing that a business is going up and to the right that it's growing and has has good high profit margin and is growing rather than seeing it going down it they don't want to get a deal they would rather pay more knowing that it's going up and to the right and so profitability is really important. No one cares about top line nobody they only care about profitability how much is left over and the free cash flow of that business and so you really want to make sure you're getting full value for the work you do for your clients meaning try to get as much gross margin as you possibly can and you got to train your teams that they should be value selling your services. This is not a commodity we are a trusted value add to you Mr. client or Mrs. Client um and so continuing to focus on improving margins is really important. There's also things that most people don't realize especially like in your industry yellow iron so I owned a lot of yellow iron because I own demolition businesses yellow iron is actually a liability okay because a lot of reasons one capex is kind of a a negative so capital expenditures are a negative because most buyers are like well if we have a heavy capex budget that's going to come out of our free cash flow every year and not only that if we buy it it's a bunch of deferred maintenance so those things can be a negative in your industry and so some of the things that you want to be thinking about is how do I look more attractive to a buyer well it might be it might be a really good lease program if if you can make the economics work and still you know get the price that you need from your customers. Same thing on pickups right pickups are one of these things are a giant cash suck. There's a lot of maintenance all your guys of course want their shiny new truck it's a status symbol for your workers and your superintendents they love them. And so one of the things to think about is same thing you might want to consider some things and you gotta you got to make sure the the math pencils that you might consider like there's you know um really good lease programs for pickups out there they can be expensive um it's a monthly cash burn and so you got to make sure it works for your business but things like CapEx matter bonding that's a big no no though so the more bonded work you have the less attractive you are as an acquisition target. So you want to try to keep your bonding exposure to you know look I get I did a lot of bonded work and it was a necessary part of my I did schools I did federal jobs all kinds of stuff and they were bonded. The main thing is just trying to keep it as a percentage of your revenue to a reasonable amount here's another thing like oil and gas work. Some people do a ton of oil and gas work. Well if you're a buyer you get really nervous if you're if your 80% of your revenue comes from the oil and gas fields because as soon as gas prices go down all those clients stop spending and so they don't want commodity exposure to one particular thing. Like here's another one one large client let's just say you work for a big utility and it's 70% of your revenue but they're a great client they're paying you know they pay you know the money's good well they they see that as a huge risk that you know you have an accident on that client's job and you get kicked off and you don't come back guess what you just lost 70% of your revenue overnight. So there's little things like that that and there's a million more but there's little things like that that you want to be thinking about safety safety culture matters a lot because you add your TRIR or your EMR to a platform you just brought down the safety record of the whole business and they'll you have a bad safety culture they may throw out the deal just because of that and it also is an indicator of how you think about you know your the safety of your employees so you know I have a million other things I can't give away all the secrets on on your show but it's um those are kinds of things that you want to be thinking about and that's where I say you want to start from the endpoint. What is good look like in the future and just start chipping away at it. You don't have to do it all overnight world isn't made in a day um but you you got to start somewhere and just start chipping away at all those little things to make your business higher quality and considered higher value.

Market Timing And Blue-Collar Premium

Burnout, Space, And Getting A Coach

SPEAKER_01 43:58

No I think those are golden absolute golden tidbits. I want them in nice rigs. I want them not only do I want them in nice rigs, I want them to be at the job. So when the truck fires at five o'clock in the morning I don't want to worry about batteries I don't want to worry about a brick and tire I want to make sure they're gonna get there and their little butts warm on the way to the job when it's cold or AC, whatever. Yep. But that's the biggest thing when um I think people view like especially when they're starting out in the trades that pickups are assets. And I'm like guys they can be viewed as assets and actually call nine chances out of 10 they're a liability check that repair and maintenance column and then get back to me. And that's what I do. You you said it well when we were talking about yellow iron Just a minute ago is maintenance deference. Like I that's a great way of putting it. I do PM agreements on every big piece of yellow iron I got. They were just doing a 3,000 hour service on my big tracto yesterday. They came out and did the service. I'm not going to get a bill. I'm not going to get some surprise$5,000 hit because my machine rolled over 3,000 hours as part of my fixed payment. Now, those are things a lot of guys, I didn't know that when I first bought into iron, I was just traditionally financing the cheapest price possible and getting whacked by repairs and maintenance, as you know, of course that warranty wore out because nobody warned me about that either. And so, but lease the the the things that that are out there for contracting businesses now that are rental and lease agreements, don't think having 10 pickups on your balance sheet free and clear means a whole lot to a whole lot of people. And hopefully you can back me up here, Corey. But from what what I've heard is like, you know, having a whole fleet of pickups, well, they can do that with one phone call and they can have 500 pickups there through this lease company and not have to balance sheet them one bit and it's 100% write-off. And you know, all they got to do is get fuel cards and they're rocking and rolling. Like that's that's how they view this, you know. And so spend that money in um your yellow iron, but also protect yourself that you're not out there trying to run an 8,000-hour track on a production job that you're trying to keep under, you know, 300 foot or more than 300 foot a day. Like weigh your options there, right? And so you can increase value, in my opinion. Back me up here, Corey, if you are running newer equipment, you're gonna have happier employees as long as they're not as long as the math works 100% and you can sell what it takes to know your overhead on that piece of equipment and the payment and the man that's sitting in it and the fuel that goes through it. Like there's a whole lot to go into that, not just run out and buy you a piece of equipment. But if you can, your market locally or regionally can sustain running newer gear, you're gonna spend more time doing what you're being paid to do rather than working on equipment. And I know you can probably speak to that. I couldn't imagine the demo world and rebar poking and oh that's a good one.

SPEAKER_00 47:14

Imagine every every job you put a uh an excavator on, you're basically self-destructing it everything it does, right? So the amount of maintenance that goes into demolition equipment is unbelievable. Um and then, you know, as that equipment ages, and you don't, you know, it it just gets more and more and more. So it's it's tricky, it's not simple, and you also lose out on the depreciation add back for EBITDA. So just as it just so you know, like you it's all an expense when you lease it. So that that is a hit to to EBITDA, but it doesn't have the defer. So you gotta you gotta kind of weigh the pros and cons for your own business. So I don't want to give you, you know, give anyone hard advice on that, but it's just something to to weigh the pros and cons on as you're thinking about creating value in your business.

SPEAKER_01 48:08

Man, if uh what do you consider a structured good exit? Like what would in your I understand each and every deal is different, but we hear exits and then we hear structured exits, and there was time and planning. Kind of walk us through what those differences I know you've seen enough of them already. You see these rushed, hey, I just want to be done, guys, but you also see, hey, I really want to consider this in the next three to five years. Um, what do you see the common denominator number one with those guys? And uh obviously which one do you uh recommend for not only for them, but for the entire company?

Where To Find Corey And Closing

SPEAKER_00 48:56

Yeah, look, everyone has their own, you know, reasons for selling, you know, and so you know, they're so it kind of I always start with what's the motivation, right? What what is your goal and what does a good transaction look like for you? For some people, it's just I want as much money as possible, and I want it right off into the sunset the next day. And for some people, it's very different. They may have put away a you know, you see these contractors that are loaded, that have made a fortune for many, many years. Richest guys in my hometown in in Iowa were contractors, right? And so some of those those people are their number one thing is I want to make sure my my people get taken care of, and that my I want I don't want to be rebranded, and I don't want it to become corporate and whatever. There it's so you got to start with what the real motivation is, uh, because there's no one size fits all. Um and then your timeline, you know, it also kind of depends on what your timeline is. I I run into to people that are 65 years old and they're just looking to make sure I I just signed a client yesterday, and he said, My only motivation is I want to make sure I don't have a health event and leave my wife with a mess. So I don't need the money, but I want to get I want to get this and leave it nice and tidy for her so that I don't leave her with a headache. And so his motivation wasn't maximum value, it was protecting his his wife. Um, and then I see 40-year-olds who are completely fried and burnout, and they're like, dude, I just can't do it anymore. So it I there's no one size fits all. But what I would say is if you have the ability and you've got the the willingness to do it, you can almost definitely put your business in a better position to sell for more money if you have time. Um and there's a lot of these little tweaks that we can do, even if it's just a year, you can do some tweaks to improve the quality of the company and also you know make some of those changes. Like I say, if you wanted to, you know, put in your own replacement or get that started, you can do things like that. But if you want to just get maximum value tomorrow, um then you got to figure out well, what's what's the right buyer look like? Um, because there are so many different kinds of buyers out there. What I will tell you is it's a very good time to sell. This is something people like they say, oh well, the economy is so weird right now, and uh there's so much uncertainty. Here's what I will tell you number one, we're we're at basically all-time high valuations for blue-collar businesses. People are terrified of what how AI is going to disrupt other industries, and so they're even gravitating more to our space. Three, there's a massive amount of capital out there that has not been deployed, and they're desperate to deploy it because they don't make any money unless they deploy their capital. These giant funds can only charge their management fees and their carry, which is how they make their money, is this carried it carried interest that you'll hear about. Um they they make their carry once they deploy capital. So they're willing to even overpay for businesses because they got to deploy their capital. And so, even though it might feel like a weird time in the current economy, um, it's actually a great time to sell. That doesn't mean it's right for everyone. It's just it's a data point for you to know that we're in a lucky space being in the blue-collar industry because people want, you know, it's like like my landscaping business, my tree business. You still gotta have your trees trimmed, you know. AI ain't getting rid of that. So, um, and by the way, tree businesses are going for all-time multiples too. So um, yeah. So, you know, I I I didn't really answer your question in a clean way because there's no one size fits all. But these are the things that, you know, I'm happy to to talk anyone through that has questions about it.

SPEAKER_01 53:08

Blue-collar performance marketing's passion is to bring attention to the honest work done in blue-collar industries through effective results-driven marketing tactics. They specialize in comprehensive digital marketing services from paid advertising on Google and Facebook to website development and content strategy. I started working with Ike and the team earlier this year, and they've had a huge impact on our specific marketing campaign and trajectory of our overall company. Their expertise in digital ad management, website development, social media, and overall marketing strategy has been an absolute game changer for our sales and marketing at SciCon. If you're looking to work with a marketing team who does what they say, does it well, and is always looking for ways to help your company grow, book a discovery call with Ike by going to bcperformancemarketing.com backslash BCB podcast, or click the link in the show notes slash description below. Thanks, guys. What I'm hearing recurringly is take take a second to breathe, get with somebody that's done this before, and that's done a structured exit, breathe, get a plan, get a strategy, take a look at the numbers, get it to somebody that knows what they're doing. Hopefully the team over at iconic and and yourself, man. Um, one last question. I pretty much ask everybody, and and this answer will be perfect. It maybe we're referencing back to that 40-year-old that is just completely burnt out, or that mid-30-year-old, or um, you know, they gave up their 20s and they're 10, 15 years in here, and they're just really not catching that traction. They just believe that they're stuck. You know what I mean? That maybe physically, mentally, emotionally, man, but just they just don't understand how to move forward. They're putting their boots on every day and they're giving their 12, 14 hour days, playing with the kids, going to sleep. But how do we start transitioning our mindsets um and be more legacy focused?

SPEAKER_00 55:14

I mean, that's one of the hardest things there is to answer. Um because look, I've been there. What you know, when I left the business, uh, I went and took nine months off. I was so fried after all the years and the ups and downs. Um I needed a hard break myself. I know what burnout feels like. And um sometimes you just don't even know which way's up, and you don't know, you know, you start you just start to feel really unhealthy in every way, physically, mentally, whatever. Um so it's it's hard to tell people how to solve that because I've been there and not know how to solve it myself. Um what I'll say is usually you need to you need to take a little bit of space from the business and just step outside of it. A lot of times you see so much more clearly when you step away. And usually there's a way to do that. The business probably is not going to die if you're gone for a week or two. Um if if the business has got any kind of structure or any kind of team, um take the space that you need to get your head clear. Um talk to talk to people that have been through an experience before, get advice from smart people. One of the things I have always done, I've been in a peer group for a long time, and that's a a group of other executives that run businesses, and I ask really smart people for advice. And it's the best thing I can recommend to anyone is to surround yourself with people that are smarter than yourself. Um, I always try to be the dumbest guy in the room. And um so take the space you need, ask advice from people that have been through it. Don't be afraid to look dumb because like you you said earlier, you know, like people have this uh what did you call it, the imposter syndrome, right? It's okay. Everyone has it. Everyone has it, and it's okay. So don't be afraid to ask questions that that might make you feel dumb because I can promise you they probably had the same questions themselves, they might still have the same questions themselves. Um and then when you got the space you need, you typically will have the clarity to put one step in front of the other. And what I'll say is for people that are out there, you know, uh work get get a coach. You know, get up get an executive coach. They're expensive. Um but I'll tell you one of the best things I ever did five, six, seven years ago was get an executive coach that I started working with a couple times a month. And you know, being running your own business or being a CEO of a business is the loneliest place in the world because you don't want to look dumb in front of your guys. Your wife's sick of hearing about it, so you can't bring it to her anymore or him if it's you know, whatever. So you you you just you you gotta have someone that you can talk to to ask tough questions and get feedback. And so it kind of goes back to what I said like surround yourself with smart people that have been through it before and give yourself the space you need to to to figure it out. And and and and look, our team at iconic is is there as well as a resource. So, you know, if we can ever help anyone out there that's at that point where they're like, Man, I got gas in the tank, I just don't know what to do next. Yeah, I see that all the time, and that's what we're here to help with.

SPEAKER_01 59:02

Yeah, don't get stuck, don't get stuck, and then ask your buddy who's stuck with you what to do about it. Yeah, go find somebody that has uh found their way out of that mud in that hole. And man, it's so important. And you're right, we are a lot of us standing on a lonely island out here, navigating between the family, the business, uh, the partners or whatever it may be, and um the vendors and the materials, like all of it. Like it's very lonely over there, and and it's really too hard to explain. So um peer groups, mentors, advisors, you've got to have somebody that understands the pressure that you're at to just literally talk A to B and not trying to catch them up to speed. Um, you know, you said earlier, you know, executive coaches are expensive, but you also said earlier, you know, pay pay above of where you're going with the CPA earlier. And I could not agree more, man, because I I you want to be if your CPA wants you doing a million and you're doing 500, 600K, fight like tooth and nail to get in his door because you want to be doing at least a million. That's his bar minimum. So he's gonna, of course, help you grow. Look for what growth. Same thing here. If you get around a bunch of like-minded guys or an executive coach or a coach of some sort, and hey man, what's my next step? That's what you can ask on that phone call or a mentor, an advisor. Just make sure you're taking in information from people that have been down that same road, same track, and have navigated successfully away from it in whatever parameter. Um man, Corey, if you wouldn't mind, if you uh where can we find you?

SPEAKER_00 1:00:57

Um, yeah, you can find me at um iconic founders.com. Um, you know, I I I can be reached there. Uh, it can go right through to my email. Um, I'd encourage people if if you're willing to check out my podcast. I talk to blue collar founders. I just interviewed a landscaper this morning, uh blue collar founders every week. And um, you know, I'm learning stuff from them, and I think you would too. So I appreciate you letting me give that a plug. And um look, I'd love to stay in touch. If I could ever uh be a resource to anyone on on your show or you side, I'm I'm here.

SPEAKER_01 1:01:33

Man, I really appreciate you coming on this show and giving us an insight to the very far light at the end of the tunnel that a lot of us think we'll never get there, but honestly, is closer than most of you probably have ever realized, and uh wanted to give some highlight. And honestly, for what you're doing, past the point, hey, you've done this thing, you're not just sitting idle. Anyone that's passionate about the industry and helping the industry because they've navigated it. Man, that's super, super passionate. Uh, share the same passion with you and and and pray for success on the turn. Um, I'll be I'll be definitely tuning into that. Guys, I really appreciate you tuning in this week. I'll be out at Kana Expo next week. We have three individual live podcasts. The podcast probably gonna be a little bit uh loud over the next couple of weeks, but I'm very excited to bring you those guests. Hope to meet you guys out there. If you haven't checked our LinkedIn and our socials, there's a photo carousel of where the podcasts are gonna be, who I'm interviewing, and um go check out SciCon's socials or YouTube. There's photo carousels on there of where we're gonna be meeting up. Really cool little sim uh simulators from Sweden uh gonna get some time on that. Full motion simulators on any type of equipment and CDL. So I'm really, really excited for next week. Guys, till then, you guys take care and be safe out there. If you've enjoyed this episode, be sure to give it a like, share it with the fellas, check out our website to send us any questions and comments about your experience in the blue collar business. Who do you want to hear from? Send them our way, and we'll do our best to answer any questions you may have. Till next time, guys.